Sit down and buckle up for this one! Just when we thought this market couldn’t get crazier, it did…
A “mix of excitement and rush” has sent Canadian single-family home prices into space! With this, many parts of the country are feeling this.
RBC Senior Economist Robert Hogue, wrote earlier this month that in the past six months, the benchmark price of a Canadian single-family home has risen by $100,000. That’s a 15 percent increase in value in only half a year’s time, which ranks as the sharpest increase to the national benchmark price of all time.
In line with the well-documented move in buyer interest to suburban areas, the country’s most expensive cities for real estate — Vancouver and Toronto — didn’t record the largest single-family home price gains in the period Hogue looked at.
Homebuyers in Barrie have seen single-family home prices jump by $147,000 since August. Meantime, in Fraser Valley, a region east of Vancouver that contains the small cities of Abbotsford and Chilliwack, recorded a $145,000 increase in the single-family home prices during the same period.
Vancouver and Toronto didn’t slow down either. Are you ready for this one? Hogue, noted prices had increased by $143,000 and $139,000 over the last six months. WTF right?!
“Clearly homebuyers continue to be a force to be reckoned with a year into the pandemic. Rock-bottom interest rates, changing housing needs and high household savings seem to have motivated many to make a move — or take the investment plunge,” Hogue wrote.
Speculation has also arrived on the heels of the steep increase in home prices, the economist said. Buyer “FOMO” — the idea a homebuyer may lose out on a property they can afford if they wait too long — is another dynamic at play in this.
While Hogue writes that an “overheated market” increases the risk of a future price correction, RBC’s economics team continues to forecast persistent price appreciation for the remainder of the year with the pace of the gains gradually declining.
“A creeping-up of longer-term interest rates, deteriorating affordability, the resumption of office work and possible policy intervention will eventually cool homebuyer demand and set the stage for a soft landing,” Hogue wrote.
Earlier this month, TD Economist Ksenia Bushmeneva wrote that price moderation may come by way of an increase in listings hitting the market from sellers who are more confident in the improving economic outlook.